An advisor's thank you card to clients has provoked Morgan Stanley's ire — and helped the firm win another battle over alleged client solicitations.
The wirehouse drew attention to the 27-word card in a lawsuit filed against advisor David Sayler, who quit to join rival UBS in June.
Several weeks prior to leaving the firm, Sayler sent the company-approved thank you cards to more than 60 clients, according to the lawsuit.
"Sayler did not disclose to Morgan Stanley that he intended to resign in only a few weeks and Morgan Stanley would not have approved a card saying ‘I enjoy working with you and look forward to the years to come’ had Sayler disclosed that those ‘years to come’ would be years spent working at another financial firm," the wirehouse says in its lawsuit filed in a federal court in Oregon.
A judge granted the firm’s request for a temporary restraining order Wednesday, according to court documents. The order bars Sayler from soliciting clients pending a FINRA arbitration case between the advisor and his former employer, but it does not prohibit him from returning client calls and emails.
The lawsuit’s inclusion of everyday advisor tasks such as writing thank you cards to clients suggests that other routine advisor activities might be revisited and cast in a new light following a resignation. There is precedent. Last year, as
Context and timing in these matters count, says Tom Lewis, an attorney not affiliated with the Sayler case. When were the thank you cards sent? Does the advisor regularly send such cards or was this a rare event? In other words, was it business as usual?
“We need to find out more about the facts because the way it is cast [in Morgan’s complaint] it was done a couple weeks prior to his resignation and he was doing it solely to reinforce his relationship with clients,” says Lewis, an attorney at law firm Stevens & Lee. He adds: “When you are leaving a firm, you have to be careful about what you do.”
Adding another wrinkle to case, Sayler had been a member of a Morgan Stanley team until approximately two months prior to his June 13 resignation. His former teammates remain at Morgan Stanley as
Morgan Stanley asserts that Sayler remains bound by joint production agreements he signed while at the wirehouse.
“It seems that a driving force, from reading the complaint, is that one team member left and the rest stayed,” says Ross Intelisano, an attorney at law firm Rich, Intelisano & Katz. He is not affiliated with the case.
Michael Bonevento and his team left Ameriprise in 2019 to join LPL Financial. He says too much time has elapsed for him to now be accused of misappropriating client information.
Gordon Gray is the executive director of the Pinpoint Policy Institute. Prior to launching Pinpoint, Gordon served as the vice president for economic policy at the American Action Forum, where his portfolio included the federal budget, taxes, the macroeconomic outlook and general economic policy matters.
A court of appeals agreed with Commonwealth's contention that a jury should decide if investors were harmed by investment disclosures allegedly withheld from them.
Sayler also served clients belonging to a retired team member, James Maddux, who left the business in 2017. Maddux is due to receive revenue generated on his former accounts through 2022, according to Morgan Stanley. Sayler and his former teammates “agreed not to take information or solicit the accounts covered by the agreements for at least as long as Maddux is to continue receiving retirement income based on them,” according to his former employer.
Those non-solicitation provisions notwithstanding, Sayler has allegedly solicited clients, according to Morgan Stanley, which claims that clients have contacted the firm about entreaties they’ve received from Sayler to transfer accounts to UBS. The firm did not name any clients in its lawsuit nor did it specify if those clients were previously served by Maddux.
“All firms on the Street are very protective of retirement agreements because they encourage senior advisors to enter into these agreements,” Lewis says.
The company further accuses Sayler of printing out 170-pages worth of documents the day prior to his resignation, though Morgan Stanley doesn’t specify their contents or if Sayler took them with him following his resignation.
Morgan Stanley argued that without a restraining order against Sayler, its business interests would be at risk, the firm claims.
The firm did not specify how many clients may have transferred assets to UBS since Sayler’s career move.
Sayler had been with Morgan Stanley, and predecessor Smith Barney, since joining the industry in 2006, according to FINRA BrokerCheck records.
He did not respond to a request for comment.
Spokespersons for Morgan Stanley and UBS declined to comment on the litigation.
Morgan Stanley has filed a number of lawsuits against former employees since
Morgan Stanley has won or reached settlements in many of the cases it has filed.
“Whether or not it makes financial sense in each of these matters to get a TRO, I don’t know the answer,” Intelisano says. “But I do think Morgan Stanley is likely saving money based on the chilling effect of all these TRO lawsuits they are filing because it dissuades their FAs from moving.”
